ACCORDING to the Financial Reporting Council, this has been a pretty good year for corporate governance. In its review of the year, published today, it notes with understandable satisfaction the widespread acceptance and adoption of its latest code, which encourages shareholders to engage much more with the companies in which they invest. There is more to be done of course, but the FRC gives the impression that things are headed firmly in the right direction.
The activists have had an impressive string of scalps this year - - a case in point is the major overhaul of the board at Olympic fiasco security firm G4S that recently arrived chairman John Connolly announced yesterday. Next up is to see who will be chairman of Glenstrata, the business formed by the merger of Glencore and Xstrata. If the choice is a toughie able to keep chief executive Ivan Glasenberg in line, that will be chalked up as another success for shareholder power.
But it is also what you don't see. You don't see the headhunters checking out their shortlist of board candidates with the biggest shareholders and you don't see the regular stream of chairmen and remuneration committee heads coming in for talks to get some agreement on pay policy now to avoid bust-ups at their annual meetings next summer. You don't see the quiet campaign being waged against efforts to change the calculation of the retail price index because it could lead to lower returns on index linked gilts.
And unless you look very carefully, you don't see just how unhappy big investors have become with the auditors.
This is particularly ironic as a few weeks ago saw the 20th anniversary of the Cadbury Report, set up because of investor concerns about the quality of published accounts and auditing following the Polly Peck and Robert Maxwell scandals.
Twenty years on, investors are still very unhappy with the auditors, whom they feel can get too close to management and lose their independence. …